October 3, 2013

Federal Government Closes Down Underground Drug Site Silk Road

The Silk Road, an underground website that facilitated the sale of illegal narcotics, has been shut down after the US Department of Justice raided the home of the man they believe owned the site.

Ross William Ulbricht, known online as “Dread Pirate Roberts,” or “DPR”, was arrested in San Francisco on Wednesday. The FBI also seized the website and $3.6 million in Bitcoin, making it the second largest seizure of the digital currency. Ulbricht is now officially charged with narcotics trafficking conspiracy, computer hacking conspiracy, money laundering conspiracy and has even been accused of hiring one of the site’s merchants to kill a user who was threatening to release the identity of every Silk Road user. Ulbricht will face Judge Joseph C. Spero on October 4 in a San Francisco federal court.

The FBI was able to find and uncover Ulbricht with help from Google. After discovering Ulbricht’s Gmail account, an undercover FBI agent was able to track his movements on Google+ and YouTube. The FBI then made a request to Google for the IP addresses used to sign into Ulbricht’s account. The IP information also gave the FBI details about locations where Ulbricht was using his Google accounts.

The Silk Road owner used virtual private networks (or VPNs) to generate false IP addresses to cover his tracks, but this VPN was later subpoenaed by the FBI as a part of this investigation. Shortly after the subpoena, Ulbricht attempted to delete data from the VPN servers, tipping off the FBI that Ulbricht and DPR were at least in the same vicinity, according to the BBC.

When in operation, the Silk Road was often compared to online marketplaces Amazon or eBay. The site operated on an anonymous and private network called the Tor Network. Silk Road users were given the opportunity to buy a number of contraband and illegal items, including illegal narcotics, fake identities and, presumably, murderers-for-hire.

Every transaction on the site was paid by Bitcoin, an online currency with no paper trail. The hidden network and the anonymous currency ensured users could keep their transactions hidden from anyone in the outside world.

In July, for instance, some Russian hackers used the Silk Road to purchase heroin and have it mailed to security researcher Brian Krebs in an attempt to have him arrested for drug possession.

“The site has sought to make conducting illegal transactions on the Internet as easy and frictionless as shopping online at mainstream e-commerce websites,” reads the civil complaint filed by the government on September 30. The complaint was unsealed yesterday following Ulbricht’s arrest.

The 29 year-old University of Texas graduate is also said to have hired a hit man from the website to kill another user. Acting as DPR, Ulbricht gave the hit man the name and physical address of the other user and paid $150,000 to do the job. Law officials said they had no record of the person Ulbricht was targeting, nor were they aware of any murder at the time the hit was allegedly placed.

The FBI was tipped off to the existence of the Silk Road when an undercover agent happened across a post on a public message board written by a user named “Altoid.”

"I came across this website called Silk Road," wrote Altoid. "Let me know what you think."

Altoid popped up again later on a message board discussing Bitcoin. According to the undercover agent, Ulbricht was employing a common marketing tactic, trying to make the Silk Road go “viral” by drumming up conversations about it in different places.